Specialty
No late fees, fast delivery and accurate movie suggestions
netflix’s success story
In 1991, Reed Hastings founded Pure Software, which wrote a debugging tool for engineers. He was eventually joined by Marc Randolph as Vice President of Marketing. Shortly thereafter, the company was acquired for $750 million and renamed Pure Atria.
After the merger, Reed left Pure Atria and founded Netflix in 1997 along with Marc. Reed came up with idea after running up a $40 late fee due to a misplaced copy of Apollo 13; he decided to offer online rentals and abolish late fees.
In 1998, the pair launched the Netflix website with a single-rental model. On its first day, the website received 500 orders. Within 30 days, Netflix was seeing 1,000 orders per day.
Netflix introduced its current subscription model in 1999. By 2000, they had dropped the single-rental model entirely. Most plans now offer unlimited rentals, no late fees and no shipping charges.
Netflix went public in May 2002 with an IPO of 5.5 million shares at $15.00/share. By 2003, it posted its first profit in 2003 of $6.5 million–nearly 5 years after launching.
Competition from Blockbuster and the inevitable transition from disc to digital delivery are challenges for the company, but with approximately 8.2 million subscribers as of 2008—a 21% increase over 2007—and revenues in excess of $1.2 billion, Netflix continues to be a viable player in the online retail space.
did you know…
… the average customer rents 5-7 movies a month? Netflix also has an online queue system; most customers have 20-25 movies on this list. Once a customer returns a movie, the next item in the queue is automatically mailed out.
… the company has about 39 warehouses throughout the country? This allows most customers to get a movie in two days. On average, about 1.6 million out of Netflix’s total inventory of 55 million DVDs and Blu-Ray Discs are rented on any given day.
… Netflix’s early success didn’t involve normal advertising channels? Their first customers were the result of personal connections with early DVD adopters in Usenet groups.
… Netflix uses Cinematch, proprietary recommendation software? The system monitors viewing habits, reviews and inventory to make viewing recommendations to its customers.
… Blockbuster, Netflix’s chief competitor, launched its own online subscription service in 2004? It is about 1/3 the size of Netflix in terms of subscribers.
… Netflix invests heavily in its employees? Like its unlimited rental model, its salaried employees have unlimited vacation days. Even underperforming workers are given generous severance packages to ensure the company only has the best and brightest.
